Overtime Can Cost Your Company

After the 55-miles-per-hour speed limit, says Marc Lorenzen, president of PTI Environmental Services, in Bellevue, Wash., the law regarding "comp time" is the most violated in the country. His company is getting socked with a penalty that will probably be between $10,000 and $30,000, for a practice most employers don't think twice about. The company used to ask employees to work late to meet project deadlines. PTI paid employees for those extra hours. If employees requested it, PTI would also occasionally let them take an afternoon off without pay.

While that may seem fair, it's not allowed, according to the Fair Labor Standards Act (FLSA). PTI's salaried workers are professionals, considered "exempt" from overtime pay. They may not be docked a partial day's pay, under Section 541 of the act. They may take an entire day off without pay as long as they meet two conditions: they're exempt employees, and they're not taking the day off because there is no work to do.

If the Department of Labor (DOL) discovers you haven't been complying, the penalties are steep: employees lose their exempt status, which means you have to begin paying them overtime and you must pay them back overtime for the past two years. What's more, the DOL will often investigate the status of other employees at the company as well. That was the case for Lorenzen, who believes a former employee filed a complaint with the DOL about his company.

For a copy of the FLSA or Section 541, call the DOL (202-523-1407) or your local Wage and Hour Division (in the yellow pages). If you want a more readable description of the law, ask for the nontechnical 541 bulletin. -- Ellyn E. Spragins